Strategic Management

• Strategic Management is the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.
• The stages of Strategic Management include Strategy formulation, Strategy implementation, and Strategy evaluation.
• Competitive Advantage is any activity a firm does especially well compared to activities done by rival firms, or any resource a firm possesses that rival firms desire.
• Strategists help an organization gather, analyze, and organize information, make long-term plans for the firm, and identify and evaluate external opportunities and threats.
• External Opportunities and Threats refer to the macroenvironment that could affect our organization in the future, including PESTLE factors and demographic, competitive trends.
• Internal Strengths and Weaknesses are an organization’s controllable activities that are performed especially well or poorly.
• Long-Term Objectives are specific results that an organization seeks to achieve in pursuing its basic mission, and should be defined as more than one year.
• Strategies are the means by which long-term objectives will be achieved.
• Annual Objectives are short-term milestones that organizations must achieve to reach long-term objectives.
• Policies are the means by which annual objectives will be achieved.
• The strategic-management process can best be studied and applied using a model.
• Engaging in Strategic Management allows an organization to be more proactive than reactive in shaping its own future, initiate and influence activities, and exert control over its own destiny.
• The principal benefit of strategic management has been to help organizations formulate better strategies through the use of a more systematic, logical, and rational approach for decision making.
• Through involvement in the process, managers and employees become committed to supporting the organization.
• Organizations that use strategic-management concepts are generally more profitable and successful than those that do not, with significant improvement in sales, profitability, and productivity.
• Firms with management systems that utilize strategic-planning concepts, tools, and techniques generally exhibit superior long-term financial performance relative to their industry.
• Some nonfinancial benefits of a firm utilizing strategic management, according to Greenley, are increased discipline, improved coordination, enhanced communication, reduced resistance to change, increased forward thinking, improved decision making, increased synergy, and more effective allocation of time and resources.
• Potential pitfalls in strategic planning include using strategic planning to gain control over decisions and resources, doing strategic planning only to satisfy accreditation or regulatory requirements, too hastily moving from mission development to strategy formulation, failing to communicate the plan to employees, who continue working in the dark, top managers making many intuitive decisions that conflict with the formal plan, top managers not actively supporting the strategic-planning process, failing to use plans as a standard for measuring performance, delegating planning to a “planner”
• The strategic-management process provides a basis for identifying and rationalizing the need for change to all managers and employees of a firm; it helps them view change as an opportunity rather than as a threat.
• Strategic planning is an involved, intricate, and complex process that takes an organization into uncharted territory.
• Strategic planning does not provide a ready-to-use prescription for success; instead, it takes the organization through a journey and offers a framework for addressing questions and solving problems.
• Strategic planning enhances awareness of external threats, improves understanding of competitors’ strategies, increases employee productivity, reduces resistance to change, and provides a clearer understanding of performance-reward relationships.
• Some firms do no strategic planning, and some firms do strategic planning but receive no support from managers and employees.
• Ten reasons (excuses) often given for poor or no strategic planning in a firm are as follows: lack of formal training in strategic management, no understanding of or appreciation for the benefits of planning, no monetary rewards for doing planning, no punishment for not planning, too busy “firefighting” to plan ahead, view planning as a waste of time, since no product/service is made, laziness; effective planning takes time and effort; time is money, content with current success, failure to realize that success today is no guarantee for success tomorrow, overconfident, and prior bad experienc
• Strategic management often brings order and discipline to an otherwise floundering firm.
• Strategic management enhances the problem-prevention capabilities of organizations because it promotes interaction among managers at all divisional and functional levels.
• The nine components of a mission statement include: customers, products or services, markets, technology, concern for survival/growth/profits, philosophy, self-concept, concern for public image, concern for employees.
• The eighth component of a mission statement is public image, is the firm responsive to social, community, and environmental concerns?
• The process of developing vision and mission statements includes selecting several articles about these statements and asking all managers to read these background information.
• A mission statement should be fewer than 150 words in length.
• The seventh component of a mission statement is self-concept (distinctive competence), what is the firm’s major competitive advantage?
• The second component of a mission statement is products or services, what are the firm’s major products or services?
• The third component of a mission statement is markets, geographically, where does the firm compete?
• The ninth component of a mission statement is employees, are employees a valuable asset of the firm?
• A mission statement should be inspiring.
• The sixth component of a mission statement is philosophy, what are the basic beliefs, values, aspirations, and ethical priorities of the firm?
• The process of developing vision and mission statements involves asking managers to individually prepare a vision and mission statement for the organization.
• The fourth component of a mission statement is technology, is the firm technologically current?
• The process of developing vision and mission statements involves merging these statements into a single document and distributing the draft statements to all managers.
• A mission statement does not include monetary amounts, numbers, percentages, ratios, or objectives.